tv Bloomberg Daybreak Asia Bloomberg August 8, 2018 7:00pm-9:00pm EDT
haidi: it's 9 a.m. here in sydney. welcome to "bloomberg daybreak: asia." are set toc stocks fall and trade tensions are going higher. chatter is heading back at tariffs and the u.s. is sanctioning russia. currencies are under pressure. the kiwi is declining. the outlook for growth is also weakening. >> i'm kathleen hays in new york where it is just past 7 p.m.. u.s. and japan tackle trade in new talks in washington. any deal could be threatened for support for the cpp. earnings topped estimates and the results validated disney's
decision to buy the business. tit-for-tat and comes home to bite where it matters so much to investors in the markets. china was hit hard. its currency, stock market, and the u.s. by comparison has barely felt it. seemsin u.s. trading, it the uncertainty over what is next will get worse and worse. they kept stocks in a narrow range. haidi: what you do see with the volatility and selloff is oil down i almost 4% in the session. a little bit of a rebound. backing directly on the back of the details of the 25% on tariffs of $60 million worth of u.s. goods on the likes of
petroleum and energy related products. kathleen: it's a little bit of a global game of chicken. the more goes, the more markets get concerned. let's take a look at the u.s. stock market. a closed with a flat day. the dow industrial average is down almost .2. the s&p is about 1% away from a record close. the nasdaq is getting little better, but not batch -- not much. let's move beyond equities in see the dollar is not doing much either. a little back-and-forth posing flat to slightly down. -- not muchnot a drop in prices. there was strong demand at the tenure auction. investors are may be looking for a haven. commodities are down a little more. about .4%. war, less global demand, commodities, maybe that is the play.
crude dropped as well. haidi: this trade war is being felt around the edges of the market. if you take a look at the lack s&p, your early trading underway in new zealand. statement from the bank of new zealand. expectations for the first move out by a further year. a very downcast statement there. they're looking at the vulnerabilities to the economy. taking a look at sydney, pretty unchanged. nikkei futures are pretty much flat. we had a mixed and lower session across asia today when it comes to costing. the yen is under the 11 handle now. numbersnd-quarter gdp
as well as inflation data came through on friday in asia. the kiwi dollar is the biggest selloff we have seen in the currency space. sellofftching for the and seeing if it continues in china as we get inflation numbers out of that economy today, kathleen. kathleen: let's get into the u.s. close. the four-day rally and s&p 500 hit a speed bump. the nasdaq rose for seventh day. 20% tree fox beat the highest earning investments after the bell -- earning estimates after the bell. let's start with the regular session. what happened? >> the s&p was close to unchanged. the nasdaq saw strikes with tech. let's go right into this snapshot. what you will see here is after-hours trading where oil is still down but only slightly. this is showing concern about the china tariffs of the fuel stocks like gasoline. let's go to the regular board of
big movers. earnings is a big story. on the is moving lower story coming out about the ceo talking with softbank one year ago about going private. we will have more on that in a minute. the rent-a-car company, avis, is getting killed after they cut their forecast. that shows the pressure on the rent-a-car industry. there are so many options now. we're still not out of the woods --snap comes out of the comes out with their news. match is a company that does a lot of different dating apps. notably tender. continued to draw an amazing number of's ascribe's -- number of subscribers. dtv is where you can find the chart. this is called has leber's get burned. the bears have been -- called it
has love bears -- teslsaa bears get burned. the deal from softbank did not happen because there was lack of clarity on who would remain the owner. oil, a big hit their. -- there. what china can put on tariffs is nothing to sneeze at. su: no, and it makes things more complicated. you see gasoline and oil typically bouncing back after a strong selloff. they are down during the regular session. they were down 4% each. let's go to the bloomberg one more time. this is a chart that tells a story called rising tides. it shows you how we have of exports ofu.s.
petroleum products from china, particularly gasoline and diesel. as a 25% tariff imposed according to china. to oil, a lot of pressure has been on it. this news overshadowed a positive report on the supplies in the u.s.. that normally would have caused oil to rise. again, there will be continued pressure heading into the thursday session, haidi. haidi: one of the ones you are watching after the bell is fox. it definitely came in strong. let's go to the after hours chart. weakness in the stock as we get the conference call. they really came in strong and it had a lot to do with their entertainment ads. expectation was for $.54 and
they came in at $.57. a big beat their. a lot of the focus was -- beat there. a lot of the focus was on acquiring the company for $71 million. they came in with very good numbers. revenue rose to 7.9 billion. haidi: su, thank you so much. waiting theu.s. trade war on several fronts, suggestions are growing the president trump could weaken the dollar. jpmorgan's chief economist says is not the best case scenario, but he cannot dismiss the idea of a more interventionalists policy. -- president occurred accused to china and the eurozone of manipulation saying the strong dollar was america's competitive edge. the pound fell to the lowest
amid growing concern that the u.k. could leave the european union with no deal on future economic ties. sterling dropped for third day, and weakened against all of its g10 fears -- peers. it's a clear sign that markets are starting to focus on a no deal brexit. it's saudi arabia threatens more pressure on canada for its criticism of the arrest of women's rights activists. one official says the next retaliatory step could affect investment flows within the two countries. they say saudia central banks pension funds have sold canadian assets already. >> canada will always stand up for our workers and companies. we need to make sure we are protecting canadian interests in any situation. we continue to engage with the government of saudi arabia. the minister of foreign affairs
had a long conversation with the foreign minister yesterday and the diplomatic stalks continued -- diplomatic talks continued. >> the u.s. will think in raksha for the u.s. attack to the spies the u.s. will sanction in thefor the attack u.k.. british and american authorities say it was a powerful nerve agent novachoke. global news, 24 hours a day here and on tictoc and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart. this is bloomberg. haidi: jenna, thank you. china confirmed they will impose 25% tariffs on an additional $69 worth of u.s. imports from the 23rd of this month. it matches the latest volley
from washington and further ratchets up this escalating trade war. both sides are matching words with action and increasingly and swiftly. very helpfully laid out this roadmap. both sides seem to be seeking this. this playground spat has global conquerors fences -- global consequences. both sides will have $50 billion worth of tariffs. if you look to washington, they are reviewing this additional amount of it will impose after september the fifth. china will respond to that with an additional amount of $60 billion worth of u.s. goods as well. this is the latest list from products.33 different they added a number of different products onto this list including things like cars, medical devices as well.
what we are getting to now, according to the likes of one -- oneom ubs, she says power from ubs, she says we are edging close to the point of no return. there's stronger exports and a big surge in imports which is likely to be short-lived. war between the two sides could cut global gdp by about 0.7%. it could get china's gdp by 1.3% and u.s. gdp by 1%. there are serious consequences and there are very few sides that this has an offramp. kathleen: the latest tariffs are heavily on u.s. fuel products industry is dependent on oils. this could affect the global oil market. why is that? china --s curious in
and china has not give a -- given a clear answer. point to the fact that china is running out of u.s. goods a can add additional tariffs to. another one is the fact that this is a sector of industry that has trumps support and one the president would like to see do well. there may be a political element to that. china has also been working pretty hard to diversify a way particularly with the middle east building ties. they're heavily dependent on many of these products from the u.s.. they imported about 4.4 million barrels of fuels in the u.s. -- from the u.s. in may alone. in june, they were the largest importer of crude. further down the road this could come back. the other energy area that the chinese are looking to target is lsg. the chinese want to use lng to a
greater extent because it is a cleaner fuel. it would impact the u.s. exporters as a growing industry and equally drive up prices and to not transition from cold lng and make it more to difficult -- more difficult. kathleen: maybe both sides are showing the other i can take the pain of a trade war, how about you? china's correspondent, tom mackenzie, joining us from shanghai. , talks between the u.s. and japan are beginning thursday. discuss this one man will discuss potential areas of cooperation. haidi: investing in time of high rates in trade tensions.
haidi: this is "bloomberg daybreak: asia." i'm haidi in sydney. betty: i'm kathleen hays and -- kathleen: i'm kathleen hays in new york. trade tensions go higher and the u.s. announced sanctions on russia. oil tumbled and treasury rose. jeff bowie joins us now. -- truck bowie joins us now -- chuck bowie joins us now. you think this could go to or three more years. at this point in time, how much concern, uncertainty is the escalating trade war causing when you look at the stock market? chuck: thank you for having me, kathleen. if you look at the overall
fundamental background in terms and fundamentals, it is quite positive when it comes to economic growth rates and earnings. when it comes to inflation and interest rates, they are still at a fairly low level even though they moved up a little over the last year or so. like rising interest rates could potentially put a ceiling on the economic equity market. rising trade tensions and a some point, although it is difficult to determine when that will happen and i don't think we are there yet, but at some point, trade tensions could cause problems in the equity markets. through the reduction of economic growth rates that is. betty: i love your metaphor that -- kathleen: i love your metaphor that we might be late in the market cycle but we could go on extra innings.
what will drive this market into extra innings? chuck: it is the earnings and economic growth. i think it is business fundamentals. one thing we have looked at when we look at market conditions today versus other. of time -- versus other periods period ine look at a the 1980's, 1987, and when you look at similarities between that year and today, we think there are some comparisons. there are a lot of differences, but there are some similarities between conditions back then and what you see today in the markets. haidi: i want to throw up a chart in our library the gives an overview of where we are at. 500, theok at the s&p vix index is lower since mid-january and the s&p is still
in distance of record highs. does that suggest complacency in this market given we have very little swift back and forth and how quickly this trade war has escalating -- is escalating? chuck: i think there is possibility of complacency in this market. potentially in the u.s. and large-cap growth stocks. maybe info tech stocks into those areas as well. when it comes to areas like large-cap value stocks, there is not nearly as much complacency. i think there is potential value there. those are good diversifiers for investors. haidi: we were looking at the numbers and 4% of s&p members are at their 52-week high. 280 of the stocks are 10% of their all-time high. if you look at the market, it is not there. does that speak to a vulnerability of the market or to the fact that everything else has room to play catch-up chuck:
i don't know whether it is the other areas of the market that have not increased as much catching up or whether what has gone up like infotech might come down at the same time. there's a gap between large-cap growth and large-cap value that is significant. it is 10 percentage points. that is a large gap. at some point, that will close. it is impossible to know when. it is likely to close later on. up aeen: i'm pulling chartier hear from our bloomberg library because you say you feel this is sort of like 1987, right? from thely cool chart library looks at 1987, 1929, versus today. don't you love it? is white line is where we are now. is around the 1987
stock crash. it to 1920ot compare nine and stick with you for 1987 where we had a big crash and things kept going after the rates were cut? chuck: we're not making projections about the broader market. we think there are sectors that are highly valued and may be amount,r a substantial maybe 15 to 25%. when you look in 1987 in particular, you have rising interest rates during a. of time, a fairly significantly period ofket -- a time, a fairly significant value growth -- valued market. we are not predicting that and do not think that is what is going to happen. but, it is interesting to look at the two years and compare them. kathleen: one of the big stories in the stock market in the last
few weeks which is what happened to the safe? with netflix and facebook trouble. that is half of the market capitalization. what do you see for them and how does it fit into your view of the stock market to continue going for a considerable amount of time? chuck: i'm not as optimistic about those of stocks. we think better diversifiers, particularly when it comes to preservation where you are safe have safeou diversification, and in growth allocation, international developed stocks have value to them. large-companyu.s. value stocks here will do well going forward.
this year, small-company stocks in the united states have done well. kathleen: sounds like we got a careful strategy for the next two or three years. it makes sense. thank you so much to chuck advisors.rgt wealth you can dive into any bloomberg functions that we are talking about on tv . this is bloomberg. ♪
haidi: this is "bloomberg daybreak: asia." -- kathleen: this is "bloomberg daybreak: asia." haidi: a quick check of your business flash headlines, reports from japan says the latest carmaker for commissions and economy data. nikkei news said they conducted improper tests and automakers were asked to review compliance
of falsified data. the nikkei says yamaha and suzuki also conducted improper tests. kathleen: samsung released details of an enormous investment plan worth $61 billion. money goes into r and d and unofficial -- artificial intelligence over the next three years. record as of spending will be in korea which is in support for the president's effort to support a slowing economy. samsung posted record profit less year. haidi: china's biggest insurer is weighing the asia business. officials say the chinese government also held discussions on finance options. they say asian operations including their east asset management unit could be valued at $51 billion. kathleen: we have a lot more to come on daybreak asia. we will be taking an in-depth
haidi: it 7:30 a.m. on thursday. here's a live shot of hong kong where we are 30 minutes away from the major market open around asia. we're looking cloudy. it's cloudy when it comes to asia markets and we are looking at a bit of a downside after u.s. stocks gave up earlier gains in a fluctuating position. kathleen: it looks kind of pretty over there. it's wednesday here in new york. it is still so hot and humid. you can see the heat over the horizon. markets took the cue. not to big move in either direction. the s&p 500 is basically flat. same thing for the dow and nasdaq. i'm kathleen hays in new york.
haidi: and i'm haidi in sydney. resort.oking at crown quite a bit better than expectations. at 554 million. they issued a final dividend of 30 of these cents -- 30 aussie sense. -- cents. let's get to the first word news with jenna dagenhart. jenna: china is fighting back on tariffs starting august 23. moveis matching the latest in widening the trade war between the two top economies. this is from coal, to medical
instruments, two vehicles. ubs is edging toward the point of no return they say. we are hearing reports that the sec is investigating elon musk's tweet about a potential buyout.d -- tesla musk talked about softbank investing in tesla previously. this year's slumping cryptocurrencies hit new gaps at -- afterter the sec the plunge and the going. it cut the market value of virtual currencies to about $230 billion. good to lost about $600 billion since crypto mania peaked in january. fortis celebrating its 10
millionth mustang. it has been a best-selling sports car in the u.s. for the last 50 years. it is the world's top sports car for 50 years in a row. the company marks a milestone where thecial parade car was made. this includes the first mustang ever built. global news, 24 hours a day here and on tictoc and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jenna dagenhart. this is bloomberg. haidi: we are counting down to some of the major market opens here in the asia-pacific. we have a lackluster handover from the u.s. and we are weighing out the increased trade tensions as well. kathleen was saying this game of chicken was pretty -- with pretty high-stakes continues. it is lookingd
like a pretty big element going into the session. >> a few things and play as we set up the asia open. have a mixed session. when it comes to other things we are watching, oil is tumbling to near seven-week lows. samsung will be in the spotlight after its investment announcement. checking in on japanese future, the yen is sticking below 111 ahead of u.s. trade talks. where japanese core machine orders and chinese inflation and its cashre beholding flows. there is a snapping of a two-day drop on that. the kiwi is under pressure. nz --is the rb the governor said if growth
slows further below potential, that could make it case for rate cuts. it may hold rates at a record low until 2020. kathleen: rbnz faces inflation and philippine faces the opposite problem. it's possible we will see a third rate hike. issuep has a big currency with the rbnz not having. not yet. >> the conundrum facing them is not whether or not to tighten, it is how much. there is weakness in the currency setting the stage. inflation hit a five-year high and added to pressure to act. the only southeast asian economy with negative interest rates. you can check out that trend on this chart in the library. with most economists penciling
in a 50 basis point increase in the benchmark rate to 4%. kathleen, that will be the biggest hike in a decade. anything from hawkish -- anything other than hawkish rhetoric would disappoint. kathleen: it'll be interesting to see how the markets react. if they play ball or pounce again, we shall see. sophie, thank you. let's move to crude oil prices falling to a seven-week low after china announced 25% tariffs on billions of dollars of u.s. gasoline, diesel, and other petroleum products. more from an energy reporter in tokyo. stephen, the klein in oil prices, how much is in tariffs and how much is broader forces that seem to be in play? any trade war would be bad for oil. especially of china is targeting u.s. crude or crude products.
as you mentioned, crude was not involved in this latest round of tariffs that they just announced read the products were. there is expectation that maybe this could affect u.s. producers. at the same time, there was bearish news in the market pushing down oil. it is not just the trade war potential, it is also the u.s. announcing the amount of stockpiles for crude falling less than what analyst estimates -- estimated. haidi: in terms of what investors will be watching for huron and -- here on in? stephen: that will be how much impact the u.s. could have on potential tariffs. a lot of analysts i have spoken to think the u.s. will be able to export a lot of oil, crude, products despite chinese tariffs. there is trepidation and fear
because china is the buyer of u.s. crude. depending on how much this will affect exports, that is something everyone will be watching. over the last few months alone, chinese imports of u.s. crude has decreased. while the government push companies to lessner -- lesson their figures more. there's a lot to figure out before the market moves. haidi: stephen, thank you much. stakea is selling a 30% in avalon to a japanese financial firm for $2.2 billion. as its the latest move continues on its deleveraging campaign. >> the $2.2 billion of proceeds
will be used by our parent to repay debt at its level. none of this cash will flow up to h and a. that is positive from our perspective because it helps our parents deleverage which is important for our overall credit story. to buying a precursor a bigger stake down the line or to your parent selling more of its stake? >> at this time, i do not think so. split -- 70/300 split for the foreseeable future. hna has said in the earnings call and i reiterated they have no desire or interest in selling a controlling interest in avalon. they see it as a core, long-term holding. aerospace is really at the core dna of age and a -- h and a.
related and aviation activities are very much the core of the group strategy going forward. what about the growing trade tensions here in the united states -- >> what about the growing trade tensions between the united states and china? >> it is a great question. earlier this year, if the trade wars were to accelerate, it would make brexit look like a warm-up act. i believe that. there is shey political tension between china and the u.s.. nobody in china is ever going to overly say stop buying boeing aircrafts. of alle clear, 25% boeing aircraft's are scheduled to go to china in the next five years. these are strategic issues at play that are fundamental to the
growth of the chinese domestic aviation industry. that was the avalon ceo speaking to our vonnie quinn there. at some of theok lines crossing the bloomberg for the moment. further details on crown resorts saying it is planning a new buyback of approximately $400 worthn worth of the share of aussie share. results-- wotrth of aussie share. we are getting a few more details about turnover for the vip program. coming up next,
kathleen: this is "bloomberg daybreak: asia." i'm kathleen hays in new york. haidi: and i'm haidi in sydney. the u.s. and japan will keep up high-level dialogues in washington on thursday with tariffs likely to be high on the agenda. colder.us now is kent former special adviser to the u.s. ambassador to japan. as wein this environment see this ratcheting up of each step toward heightened trade wars between washington and beijing, anything is really on
the table. are you managing expectations at this point? primarily, this is a matter of leverage in relation to ban. there are things on the investment side that would be attractive for the u.s.. you were mentioning energy a few minutes ago. are not so much band but japanese support for investments that will increase u.s. exports elsewhere in the region, vietnam, india, further afield, i think there is a lot of things the u.s. has a lot on the table. i would say mainly is leverage. the main target is china. to get japanese cooperation there and politically, there are
areas where we already have tariffs on. steel, autos are big-ticket item , the threat of various possibilities on tariffs give leverage to japan which ustr is looking for. haidi: i was going to ask you if you expect any progress to be made on the point of autos. kent: probably with the , it isns on the horizon a delicate political situation in michigan and so on. i think these issues will probably continue to boil until after the election. that would be my guess. terms of what, in is at stake here and the possibility of cooperation, i want to bring up a chart. it is one of our gtb chart in the bloomberg library. it shows you bars in the top
part is yellow. trade with foreign countries, specifically the u.s.. the blue line is another part of the same are divided in the middle line by zero. isn't this were the u.s. and japan have some scope for cooperation? have joined the u.s. complaint in the wto against china on intellectual properties. kent: exactly. that is precisely what we are going to see going forward. i've pr is a particular area. japan has been getting -- ipr is at the dealer area. japan has been getting better in that area. the u.s., china, and europe has hadhe u.s. and europe has the same issues on pressing china. japanese on board, i
think that would be quite a high priority for the u.s. now. kathleen: i spoke to a former trade negotiator for the foreign ministry currently involved in trade negotiations off of the record. backdrops is one of the first things that trump did was leave the tpp. do you see any signs or hear anything in washington that he relies he has to put all of his firepower on china and cannot be attacking japan and allies? he has made alliance with -- alliances with the eu. this is about geopolitics along the trade. it is about having alliances in asia. if he is not sure thinking that broadly about all of this. quite athat is plausible and important strategy in the long run. i certainly here a lot of
thinking in tokyo about the japanese liking to see us coming back to tpp. i think they have done a reasonably good job of holding it together on a temporary basis. not that it would not come back in the trump administration, but looking toward the long-term, something which has both of the trade implications and a say, itical one, as you think many people in both the u.s. and japan think that combination is an important one. it is a very good way to press the chinese. haidi: you said this is not the 1980's in the first point is how integrated global supply chains are in the volatility of even a bilateral trade war. the other point to make is that japan is not the japan of the 80's. it is coming out of deflation. is china now the japan of the 80's?
is that how washington sees its? kent: i think there is quite a bit to that. target, itrincipal is growing rapidly. china was 10 times the population of japan. they have further to go in the long run. there is no question about that. we no doubt over exaggerated the potential of japan back in 1990 or so. china in the long run still certainly have a -- has a long way to go which increases the attractiveness and it is interesting to see the administration coming to see .his kathleen: kent, a perfect points. haveto say goodbye, but we very important economic data coming out of japan. director oft calder asia programs of the john top
the -- johns hopkins school of advanced international studies. downke job -- a big drop here. there was a loss of just 1% in our survey. if you look at year-over-year, it is up 0.3%. what everybody has to ask right now, when you see a number like this, when it has to do with manufacturing and something where genia -- where japan is such an important player, does it have to do with trade and will attend over the economy? we will be getting gdp data from japan tomorrow. this is a big question. can japan come back and grow? can they boost their inflation? a lot on japan and a lot more to come on "bloomberg daybreak: asia." keep it here. this is bloomberg. ♪
haidi: we're counting down to the open of trading. nikkei futures had it down space and orders coming through. the japanese government downgraded and that is a key indicator of investment sentiment in capital spending. this is "bloomberg daybreak: asia." i'm haidi in sydney. kathleen: and i'm kathleen hays in new york. --n musk and musty oshie son masayoshi son had talks on taking the company private. masayoshihe chances son adds tesla to his portfolio? are not now, there
active talks ongoing. i do not think it should come as a surprise that a deal of any significance should pass his desk. given their outside presence on the investment scene, that should not be a surprise. vision fund still has plenty of dry powder and could invest. the question is, should they? if they would, how big of a stake? there is a big difference between a symbolic investment and something like what they've done with uber which gave them bigger shareholdings and board seats. on the other hand, tesla does not fit into the company portfolio on what they have invested so far. their focus has always been on ai and core companies -- core companies -- core competencies
and ai. we know saudi arabia's public investment fund, which is the biggest part of the vision fund has a sizable stake. if you recall, their investment in uber also preceded softbank's. the softbank decides to invest in tesla, i'm sure a comparing the relative -- a compelling narrative will be fit in. not quite flying cars, but robot pizza makers. [laughter] million,750 accompanies him. they do delivery via robots and more far-reaching just ask on how to keep the fresh foods flowing without spoiling. son pig knowledged that so far his investments have puzzled investors. they range from dna sequencing's to vertical agriculture, to
ride-hailing and insurance. he said there is an overarching theme and the theme is ai. he believes all of these companies at the core have machine learning or deep learning algorithms that will allow them to survive this next revolution in technology. that's really fits the profile. if you look at the bank portfolio, one motto is anything on four wheels that is not a car can be turned into an autonomous vehicle. these are all possibilities, but we have yet to see them become reality. haidi: thank you so much for that there in tokyo. he gives us a glimpse in masayoshi son. we're counting down to the market open in japan, south korea, and here in australia. this is how we are shaking down with the exception of sydney.
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haidi: welcome to daybreak asia. your top stories this thursday. pacific stocks fall as trade tensions ratchet up higher. tariffs heading back at and america is sanctioning russia. the u.s. and japan tackled trajan talks in washington, any deal could be threatened by tokyo's support for the ttp. it is past eight p.m. on this wednesday. thedark clouds ahead as trade war looms. has ang -- samsung investment plan, targeting biopharma and 5g.
haidi: we are seeing trade angst grip the markets and we had these trade numbers out of china, it was robust, but it did not last very long because we had the tariffs affecting the energy sector. we saw oil plunging, doing up those gains and we're wondering when that next missive from washington or beijing will come. doubts ofthere are concerned that the chinese trade numbers that show exports holding up come imports, maybe they are beginning to reflect what may already be happening and could happen if the trade war continues to intensify. it was not that there was any setback, markets did not seem to be able to move ahead.
people are waiting to see what chip falls next. haidi: this is the delicate nature of the markets which are still pretty close to record highs despite the pullback we saw overnight. let's take a look at the setup. we have an open in asia that is looking more negative than perhaps even the handover would suggest area sophie kamaruddin is on the markets. china is front and center, we dovish statement. sophie: gdp data, the head of all that we have asian stocks looking fairly mixed at the start of this thursday. this as the game of chicken continues on the trade front. that has turned fairly quiet. companiesd chinese fell the most since june overnight and in the wake of
beijing's retaliation including some had of what may come there. the nikkei down by one third of 1%, yen traders waiting on the u.s.-japan trade talks. a third day of gains ahead of that, not budging too much after core machine orders for june posted a second monthly drop down 8.8% for the month. we are seeing early moves in the kiwi dollar. pushing out the forecast for a rate hike to next year and the kiwi has fallen to a five-week low in oil -- and oil under pressure. this is china hits the u.s. fuel exports with on 5% tariffs that are to begin august 23 so crude oil remains exempt for now when it comes to the tariffs from china. when it comes to stocks to watch, keeping an eye on our [indiscernible] this would be one of the financial firms' largest deals
ever and samsung ahead of the unveiling of its galaxy note nine after announcing plans to 161 billion-- dollars. a move that could create 700,000 new jobs in korea and samsung may hire 40,000 more people. checking in on crown after its earnings up 3.6%, the company says it plans to spend 1.8 ball ssie dollarson au and it is playing -- planning a buyback. kathleen: a lot going on. let's get more with starters field -- strategist garfield evans. no big surprise except the fact that how do you predict that you predict that you're not going to do anything on interest rates for going on two years? done anythingot
on interest rates for a while and it is symbolic of the way, the word seems to be stuck on this. well global growth should be picking up but not quite as much as we might like. and there is almost a corollary to the strong employment numbers. numbers are not going anywhere. it is a bit of a grim outlook and i saw some comments on twitter about how the ibm said that it would be doing nothing same as markets had been predicting and the kiwi dropped like a stone. so it is perhaps a reality check and their is a lot of reality checks going on and the concern has to be that the biggest tolity check might be that come which is can the s&p 500 get back above that level it got to a january and stay there this time around? theink maybe that is
gorilla in the room that no one is quite daring to look at is the question of whether a return to the levels of january to return to the pain that came in february. kathleen: they seem to be one of those central banks where they do not do anything because they have to losses and minuses on both sides of the ledger which is different from the philippines are indonesia or -- or indonesia or india. do they risk getting in that group of asian nations currencies were you say if you're not going to protect your currency we will attack? think the governor is happy to see that. tends to move in the same direction as some of these asian currencies but the key thing here is because it is a developed economy, a weaker
currency can be a good thing. and can act as a pressure valve to let the steam out. to turn determine -- the economy around. that is why the rbn wants to be careful not to set off kiwi dollar strength. it has inflation more or less under control. -- the economy is not in danger of overheating unlike the philippines, they had another dreadful trade number the other day, bigger than expected trade deficit. if new zealand's trade deficit was doing the sort of things beenthe philippines have doing, they might be a bit more worried. it is not. verye philippines is interesting. that is an area where people are just saying do we really want to stick with anything in manila?
we're looking for hints of how the trade war is playing out. orders andachinery the downgrading of expectations not great. garfield: not great and it plays back to the whole thing, the boj apparently wanted to raise rates and everything keeps coming along and making it harder for it. the trade war's have to be part of that. machine orders are not a good sign. it adds this turned that you -- this turned that everyone looks for the trade war is to cause a big dramatic rock but it is more , death by 1000 cuts. and i think maybe the cuts are reaching about 1000 now and that is why we have some of the angst that is breaking out today. ofdi: $200 billion worth cuts. you can follow along on this
story, developing trading action on the blue get ml live go. at ml live go. and let's get you the first word news. u.s. waging a trade war on several fronts, suggestions are going that president trump could act to weaken the dollar. jpmorgan's chief u.s. economist says it is not the base case scenario but they cannot dismiss the idea of a more interventionalists policy. the president has excused china of the -- of strong -- currency manipulation. the pound fell to its lowest in more than nine months against the euro amid growing concern that the u.k. could end up leaving the european union with no deal on future economic ties. sterling dropped for the third
day versus the common currency ing said the weakness is a clear sign that markets are starting to focus on the risk of a no deal brexit. saudi arabia is threatening more pressure on canada for its criticism of the arrest of woman's rice -- rights activists. the next steps could affect in flash -- investment flows between the two countries. the chinese central egg and pension funds have a gun can -- begun selling canadian assets. always stand up for our workers and we need to make sure that we are protecting canadian interests in any situation. we continue to engage with the government of saudi arabia. the minister of foreign affairs had a long conversation with their foreign minister yesterday. depomed it talks continue. -- diplomatic talks continue.
>> the ruble news that the u.s. will sanction russia for the nerve agent attack in the u.k. officials expect the sanctions to take affect august 22 and it could be followed up by more sweeping rounds. british and american authorities say the there was use of a powerful nerve agent. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. kathleen: still ahead, made the hong kong startup looking to compete with airbnb. the chief revenue officer joins us to discuss fund-raising and the future. haidi: china making the latest play in this global chess game.
kathleen: this is daybreak asia. haidi: china has confirmed it will impose tariffs on an additional $60 million worth of imports from august 23. further ratcheting up the escalating trade war. tom mackenzie joins us from shanghai. what comes next after china runs out of u.s. imports to put tariffs on. tom: that is the key question. this is what you get here from the officials but from business leaders. almost a sense of resigned fatalism that the tariffs will continue to play out. that is a concern for both
sides. china said surprise, it would hit back with $16 billion as the same time as the u.s. one minute after the imposed its additional tariffs. 333 products will be targeted by the chinese including: cars and medical devices. a broad range. we're looking at getting toward the end of all this having $50 billion worth of goods with additional tariffs baked in and then you are looking at as early as a month later, even sooner, the middle of september. -- could be getting $250 $250 billion targeted and u.s. goods being imported to china that will be targeted. come into the middle
of september. outlined in terms of global gdp, you could be looking 0.7% to global gdp as a result of the trade war. you could be looking at it -- a cut of one point 3% by 2020 and u.s. gdp by 1%. the impacts are there and they could be additional steps that china could take. there is no plans for official talks and that is a concern. botheen: leaders of nations tout their growth, they know this is important to their supporters but these latest tariffs fall heavily on u.s. fuel product. do the chinese risk shooting themselves in the foot to a certain extent? tom: it is not risk free. if you bear in mind the fact that china imported 4.4 million barrels of fuel products in the
u.s. they are the largest importer of u.s. crude. they imported 15 million barrels in june. u.s. crude is not on the list but what is on the list are things like diesel and propane and gasoline and you saw the impacts of the markets. it is a risk as well because china remains heavily dependent on many u.s. imports. it is trying to strengthen ties like -- with companies like saudi aramco. it will take some time. it is interesting that some of the major gas and oil stores came out with a statement saying they had been told i the president to increase their supply area the production has been going down the last few years and they have a lot of work to do. some risks for china for this move to target energy and steel products. now i move on to
china's inflation that picked up in july. while staying within the government's comfort zone. the chief now is china economist at standard charters. inflation -- if there is tariffs, there is going to be more inflation and the other side of the coin, bad for consumers. it could slow the economy. if you look at this, what do you see? >> so far there is limited impact. we made some estimates and we think that cpi inflation will hover around 2% for the rest of the year. notwith growth risk, we do think inflation will be the main
driver of china's policy in the foreseeable future. kathleen: when you look into the expected increase, 2% year-over-year according to surveys, food prices are a big part of this, how big of a part are they of that consumer price index? the account for less than 20% of proposals. we saw-- in july inflation edging higher. considering all these factors, there could be some risk down the road on pork products because of the rise in import price if the cost of soybeans increase. ppi is supposed to be
up for .5%. if you compare that to the u.s. that is still relatively high but for china, is there a danger here that the ability of companies to raise prices, reflation is in jeopardy? we have a nice chart here showing that it will still be high relative to the numbers we saw. in the first part of the year. >> the producer price will still be supported if china increases infrastructure spending which is likely. given the recent policy shift to stabilize growth. we think of the ppi inflation will trend down for the rest of the year mainly because of the high pace of last year. i want to know what that impact will be on industrial profits which has been super supportive and also when it comes to some of these corporations. it is interesting you say the
increase in fiscal spending infrastructure investment will be a given. does that mean some of these older economy sectors will see a revival? >> the corporate sector has benefited from higher ppi inflation. if you look at historical data, china's corporate profitability is closely correlated with ppi inflation. with ppi inflation trending down, i would expect more difficulty on the part of the corporate sector to, in terms of earlier,s a mentioned there seems to be a shift to stabilize china's gdp growth. they have called for more active physical policies and we see a very substantial room for fiscal expansion for the rest of the year.
infrastructure spending has lagged behind in the first half. so boosting infrastructure investment could help to curb the downside risk for the chinese economy. haidi: if there is a more supportive easing's aunt's, would you say the windows of deleveraging are closed? hase think the focus shifted. deleveraging on the national level targeting the total debt sectors likeective local government financing vehicles. the pboc has removed the bias by providing a more liquidity through the ratio cut. the money market appears to be flush with liquidity.
that is a challenge for the central bank to channel the financing to the real economy, to support the real economy. introducehe pboc will , increase the long quota and to relax some of the capital requirements and credit and money growth is likely to pick thend be consistent with nominal gdp growth which means total wille overall still be stable. kathleen: there an estimate that chineser could cost the economy 1.3 percentage points in terms of gdp. do you agree, is that too little, could it be more? and please, a quick answer. >> depending on how severe the trade war is, if it is frictionn or trade
[indiscernible] according to our estimate based on world input and output database and also based on the u.s. tariff announced so far, including 25% on 50 billion u.s. $200 b and 10% on illion. we keep in mind that the recent market slide suggest apart from the trade and production channel that the prospect of trade war could cause more pain through confidence and sentiment channel. i think the loss is still significant but to that government seems to have quite a few tools at its disposal to reduce the downside risk. kathleen: thanks so much. joining us for an in-depth look at china's economy. especially in regards to trade
four-year netzing income of 297 million u.s. dollars raised -- beating the highest estimates. thatans a share buyback will start on august 30. crown will pay final dividends per share. spend one point 3 billion u.s. dollars on its sydney, melbourne, and perth resorts. a move that highlights japanese companies looking for growth abroad, it will be completed by the end of the year subject to regulatory approvals in australia and japan. the local unit will offer insurance products through
haidi: the nikkei looking like this after half an hours trading. and sure orders coming in weaker than expected. 1%.ding lower by .5 of the latest survey suggesting that economists are paring back their expectations of any further changes to monetary policy after the eventful end of july meeting where they treat -- tweet to the policy. kathleen: you're watching daybreak asia. let's get to the first word news. na: china is imposing 20% tariffs on $16 billion of u.s. imports starting august 23.
it matches washington's latest move and widens the trade were between the top two economies. the revised chinese list covers items as diverse as coal, medical instruments, and vehicles. both are threatening further escalation. ubs says they are edging toward the point of no return. reports from new york city sec is investigating elon musk tweet about a possible buyout of tesla. the wall street journal said regulars like to know if the message was factual. bloomberg has been told he talked about softbank investing in tesla and taking the company private. negotiations stumbled when musk discussed taking disproportionate control. slump hits slot -- new depths after the s we see -- sec [indiscernible] cutting the market value of $230al currencies to about
billion. digital assets have lost about 600 billion since crypto-mania peaked injure -- peaked in january. the question is not whether to hike for the third time in a row but by how much. surging inflation and pressure on the peso indicates a 50 basis point rise to 4% according to a bloomberg survey. that would be the biggest in a as emerging markets try to curb the fallout from rising rates in the strong dollar. fortis elevating it 10 million mustang. it has been the best-selling sports car in the u.s. for 50 years and was the world's top-selling sports car for three years in a row. the company marks a milestone with a special parade at its michigan headquarters and at the plant where the car is made. the celebration included the first mustang ever built and the one that topped 10 million.
global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. >> time to see how the u.s. markets are shaping down this morning. lots of headwinds and challenges this morning for investors in asia. have: shaping down, we trade concerns weighing on stocks in the region but the movement i want to highlight is the tumble in the kiwi dollar slumping at the the rba pushed rate outlook.- it is trading at the lowest since may 2016 against the dollar and tenure qe bonds have dropped as much as eight basis points. the kiwi dollar is edging lower, we have qe stocks snapping a decline. when it comes to the drag from the kiwi dollar, watch for the
aussie to follow suit. when it comes to stocks to watch we have earnings in focus and others themes as well. the nikkei 225 off i .51%. carmakers sliding on reports they conducted improper fuel and emissions test. suzuki's president is to speak to address the matter. them how motors are under pressure after sales missed. and rising as much as 10% on a nikkei report that it is in talks to see capital and part of an overall of its business. nothing has been decided yet, spokesman said. falling.netmarble missing estimate, the stock was cut to underweight and going forward, profit made continue to weak sales and
contracting margins are anticipated. energy a sliding despite beating estimates. the company is targeting intense cost cuts. and suncor group jumped more in six years, selling their life unit to japan. haidi: japanese automakers are falling on claims of fake data. this companion across the board, automakers falsified data. what is mazda accused of? this story seems to go on and
on. >> it is about mazda, suzuki, and yamaha. they are the latest to report found misconduct in admissions tests. media,ng to japanese their discoveries are similar to what nissan and subaru have reported so far. this happens at a process which is known as final car inspection which is required for cars sold in japan, it should not affect cars for exports. these carmakers, they did not treat this process seriously. in nissan's case, they tweaked the humidity and the environment for testing to produce results that conform to their catalog in mission and fuel economy. consumers are not affected.
nissan did not have to record does recall the vehicles. if history is any indication and if the japanese media are andect, mazda very likely suzuki and yamaha would not have to recall vehicles. the impact should be limited. if japanese media are correct. of a deal is this given mazda's history? recallhey do not have to the cars, not very big area do mazda sold most of their cars outside of japan. suzuki should take a bigger hit because japan is an important market for suzuki. shares fell more than mazda. the thing is japanese customers sensitively, this kind of negative news. if a company is involved in a
scandal like this, they will stop buying the cars for quite a long time. we should take a look at the sales momentum from now on especially on suzuki. there has been more than a few government scandals when it comes to japan, inc. what does this say about japanese carmakers? >> it shows there is a compliance issue for japanese carmakers. this final inspection issue has been going on for more than a year. usingrted from nissan uncertified instructors in its process and developing to manipulating fuel economy data. it shows the japanese companies are not treating this regulation , this very seriously and there is a fundamental compliance issue.
a lot of problems on the ground are not reported to their top management. thank you for joining us. asia autos reported in tokyo. samsung has released details of an enormous investment plan worth $161 billion. money will go into r&d and artificial intelligence, biofarma, chips, and more over the next three years. what does this mean to samsung and given how massive it is in terms of meaningful implications for the korean economy. economy hashinese been slowing in terms of growth. that has led to the dwindling of public approval ratings were president moon. the announcement of the
investment plan by samsung will be interpreted in a way as a gift for the president who has been struggling with this type activity,h economic including a lack of investment. it is a boon for modern at the same time samsung is using that money to stay committed to developing further technologies. what sort of industries are we talking about, everything from ai to bar -- biopharma. what stands out for you? >> you already know that samsung is the world's biggest chipmaker , it has the biggest sales numbers in terms of smartphone seyfert -- makers. it does not mean that samsung will remain the top leader in technology in the future to come. what it is doing is it is singling out more than $20 billion for technologies like
ai, 5g, and automotive technologies which are the emerging markets. investment plan, it is trying to say to the world that we are investing a lot of money and new technologies and it is not just chips, smartphones, and televisions we will be good at. we are trying to stay ahead on these things. note 9 smartphone, how is it going to fair amidst all of this? there is a lot of skepticism about how the note 9 smartphone which is going to be unveiled this week due in terms of the market performance. we have seen that its previous version, note 8 was not exactly the top-selling smart phone. it did not do well with samsung missing estimates in the second quarter. goodphones have been too
for so long that people are content with what they have right now. it is going to be a struggle for samsung to boost the sales from now. ok, joining us from sold. and now we will have a look at some of the stories trending across the bloomberg universe. ncaa players who [indiscernible] we look at the chinese smartphone firms that want to challenge apple and samsung. and how fluid could -- bugs could effort a food crisis. this is bloomberg. ♪ haidi: we will talk to the hong kong travel startup which has raised $200 million to go global. find out how it will take on the likes of airbnb next. this is bloomberg. ♪
kathleen: this is daybreak asia. i am kathleen hays in new york. haidi: let's take a look at travel. a fun thing to talk about. a hong kong based startup that helps looking and information, -- new financing brings funding to 300 -- $300 million. it is competing with the likes of airbnb. joining us is the chief revenue officer. i spoke to some of my colleagues who used your service to book ticketsike ocean park and other travel experiences, but we want to compete with the likes of airbnb. give us an idea of how you position yourself and how you describe your business. are an online travel platform that provides an
opportunity for people to book and discover destination services and. we carry things from tours, activities, attraction tickets, even local foods. it covers everything that you would want on a trip aside from the flight and accommodations. we are on track to making one billion u.s. dollars in bookings and that puts us in a good spot s having they kind ofst supply and products that travelers were want to see around the worldem_. -- around the world. >> what we you do with all that cash? >> one of the main things you want to do is to expand outside of asia. we work established in hong kong and it was always our long-term goal to be serving travelers worldwide so we do have our sites on europe and the u.s. and
earlier this year we have opened our officers -- offices in amsterdam and london and hopefully we will be in the u.s. as well. we want to make ourselves to be known to travelers worldwide. kathleen: i want to ask about the past, founded in 2014, whose idea, this is a crowded space that you could say, we are going to start this company and four years later we will be raising all this money. , two of themders are investment bankers, one of them coming from technology backgrounds and they are travelers themselves and they ran into a problem. they found that there were online platforms for them to book flights, to book accommodations but when it came to things to do, they did not find a platform to serve them. it is true that there is a lot of names to help people book flights and accommodations but when it comes to activities there was not that much in the
landscape. even today that is still very much the case. some of the offerings we have our unique. we are a mobile first company which means we have a lot of our products that are instant booking or translate into more few -- user-friendly language. you can wake up in the morning and decide what you want to do that day and be able to book on our platform. >> that is foreign to me, i still kind of look around. is your audience more that younger generation, new people like in asia who are going to -- do come a is there they give you a cut, is it as on the platform, how do you make money on this? airline platform, we work with more than 5000 merchant partners who provide
the services and the products we sell on a platform. on our website and at. with that means is when we work with them, we get a booking, we share that revenue, part of that revenue back with them. we are keeping part of that as our profit. that is how we run our business. we do also have other opportunities such as what you mentioned, doing a little bit of advertising on our platform as b to b toing a lot of ourere we just reviewed products on other people's websites or apps. what is the plan for an ipo? can you give us more data about your time frame? we are always thinking about this, we get asked quite often. at this moment we are still
focused on building our user base worldwide and trying to provide good expense for travelers. that we always are keeping our minds on potential ipo in the future. we talk about trade tensions playing out when it comes to areas like tourism, hospitality, and the services industry. is that something you are aware of and i would like to ask you your number one growth target. >> we believe it is precisely during tense environments like this that travel platforms like ourselves become very important. we want to make sure that people around the world get to see and experience and talk to people from different cultures, from different countries and we have not had that -- and not have that andre blocking them off
from meeting the world. we believe in that mission a lot. in terms of our goals, we want to be doing a few things but number one is to capture the consumer preference that is becoming very obvious, millennials and either -- and other age groups one to do experiences over buying things in terms of material goods. setre -- we do provide that of experiences that people can purchase. secondly, we want to make ourselves to become a household name. there is quite a few household names that people can think of when they think of booking flights online, looking accommodations online but for booking things to do, people may research shows spending 40 or 50 hours to research for their trips or talking to their hotel concierge. we want to become the name they think of when they are appearing for a trip.
task, i mom the mom knows of quite a few sites but r nameill does not know ou it. when i pass the mom test i feel our goal is met. how do you get this name, where does it come from, klook? klook the name? >> we get asked about how we pronounce the name. we usually do not correct people. either way it sounds great. the name came about from a contraction of the two words keep looking and that summarizes our mission, to keep looking on your journey. kathleen: good luck to you. it seems like you are well on your way. like so much. -- thanks so much. let's look ahead. breaking news wherever you are,
of the latest is this flash headlines. japanese automakers are falling on new claims about a data. the nikkei news says mazda is the latest to have falsified emissions and economy results. automakers were asked to review compliance after nissan and subaru falsified data. , and suzuki also conducted improper tests. the ministry of transport will discuss the matter later thursday. political dealing a blow to uber and other car for higher industries. it has given authorities permission to set minimum pay rates for drivers. the council acted after a number of ride hailers soared. uber managed to defeat a similar proposal in 2015. investors pulled money from bill gross is on fund, reducing assets to the lowest since 2014.
the eye constrained fund suffered more than $200 million in reductions last month. the year to date losses are 7% attributed in part to a misplaced met, and [indiscernible] facing an unusual challenge, persuading users to use the service less often. the company was pitched as unlimited, letting people go to the movies every day for $9.95 a month. it has adjusted the formula and limited customers to three films per month. the ceo hopes they will see one movie per month. >> if we said we will give you $45 worth of movies for $9.95, you would be saying what a great deal. the only difference today is it is going from a movie a day to three. 85 percent of our subscribers see less than three-month and the average is coming down close to one of month which is why
this business model is sustainable. let's take a quick look at how markets are trading. let's start with the nikkei. thes down .4 of 1% after core machine orders came in weaker than expected. we are going to take a look at asia futures. a gain inain in -- one market higher but we see the other two in the red. that is it for daybreak asia. haidi: taking a look at what is up ahead. inflation numbers dropping and half an hours time. this is bloomberg. ♪ ♪ this isn't just any moving day.
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♪ also ride 120 miles a week on a bicycle. u thought how much higher the stock price would be? dennis: i thought i should start writing 200 a week. if i could look like you and drink the diet mountain dew, sure. let's talk about the space program. dennis: this is the most exciting time in decades. david: you grew up in iowa. dennis: every morning i had to milk the cows. david: did you ever say to them, drink some mountain dew. >>